RBI imposes Rs 1 cr penalty on Paytm Payments Bank for regulatory non-compliances

The Reserve Bank of India (RBI) has imposed a penalty of Rs 1 crore on Paytm Payments Bank Limited (PPBL) for non-compliance of certain provisions of the directions contained in the Master Direction on Money Transfer Service Scheme (MTSS Directions) dated February 22, 2017, a media release issued by the banking regulator said.

The banking watchdog also imposed a fine of Rs 27.78 lakh on Western Union Financial Services Inc (WUFSI), a Money Transfer Service - cross-border in-bound service (customer to customer only) operator, the release said.

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The fines were imposed for an offence committed of the nature referred to in Section 26 (2) of Payment and Settlement Systems Act, 2007 (PSS Act), the release said.

“The penalties have been imposed in exercise of powers vested in RBI under the provisions of Section 30 and Section 31 of the PSS Act,” the release said.

“This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the entities with their customers,” it further said.

“On examination of PPBL’s application for issue of final Certificate of Authorisation (CoA), it was observed that PPBL had submitted information which did not reflect the factual position. As this was an offence of the nature referred to in Section 26 (2) of the PSS Act, a notice was issued to PPBL,” the release said.

After reviewing the written responses and oral submissions made during the personal hearing, the RBI determined that the aforementioned charge was substantiated and warranted the imposition of a monetary penalty, the release said.

WUFSI had reported instances of breach of the ceiling of 30 remittances per beneficiary during the calendar years 2019 and 2020, and filed an application for compounding of the violation.

“RBI determined that the aforementioned non-compliance warranted the imposition of a monetary penalty after analysing the compounding application, and oral submissions made during the personal hearing,” the release said.